We analyze the competitive effects of backward vertical integration by a partially vertically integrated firm that competes with non-integrated firms both upstream and downstream. We show that vertical integration is procompetitive under fairly general conditions. It can be anticompetitive only...

In their seminal article on multilateral vertical contracting, McAfee and Schwartz (1994) argue that nondiscrimination clauses may be ineffective in curbing opportunism and may thus have no bite. This begs the question why nondiscrimination clauses are commonly observed in intermediate-goods...

We analyze the competitive effects of backward vertical integration when firms exert market power upstream and compete à la Cournot downstream. Contrasting with previous literature, a small degree of vertical integration is always procompetitive because efficiency gains dominate foreclosure...